Insights

Multidimensional Leadership

Everyday operations at many companies are determined by a constant pressure to change. Yesterday's guidelines no longer apply to today’s world. The mere appeal to rational thought alone is not enough to bring everyone on board. Intuition plays a key role in successful change management. And it all begins in the minds of top managers.

01/2022

Porsche Consulting / Michael Pleesz
Am I reaching each and every employee—in production and in administration? The remote workers too? Emotional proximity has a motivating effect. Leaders who utilize intuition foster a sense of security. Porsche Consulting / Michael Pleesz

Dis­rup­tive tech­nolo­gies. New busi­ness mod­els. Dig­i­tal­iza­tion. And not least, unfore­see­able glob­al events like the Covid-19 pan­dem­ic. The dynam­ics of trans­for­ma­tion encom­pass all busi­ness con­texts. Clear­ly, trans­for­ma­tions are essen­tial for com­pa­nies to remain rel­e­vant and suc­cess­ful. The cen­tral chal­lenge of this process: get­ting the entire work­force on board and leav­ing nobody behind. Those affect­ed need to be includ­ed and acti­vat­ed to help drive the nec­es­sary changes, so that a moti­vat­ing sense of being an impor­tant part of the trans­for­ma­tion can grow from with­in.

“In 80 per­cent of cases, trans­for­ma­tions fail due to—often passive—resistance on the part of employ­ees, and simul­ta­ne­ous­ly due to insuf­fi­cient abil­i­ties to guide and fos­ter change on the part of their lead­ers,” explains Dr. Wolf­gang Freibich­ler, a part­ner at Porsche Con­sult­ing and an expert in new and suc­cess­ful modes of col­lab­o­ra­tion. He sup­ports top man­agers in guid­ing their trans­for­ma­tions. “Inter­est­ing­ly, one of the main rea­sons why trans­for­ma­tions stall or fail has to do with a sci­en­tif­i­cal­ly out­dat­ed under­stand­ing of how the brain works,” he con­tin­ues. The expert is con­vinced that insights from behav­ioral eco­nom­ics make it pos­si­ble “to reach peo­ple not only on ratio­nal but also instinc­tu­al lev­els.” Freibich­ler and his team of spe­cial­ists have iden­ti­fied five forces with the abil­i­ty to spur and safe­guard nec­es­sary changes.

Forward-looking leaders apply five key elements of strategic change management to ensure that their transformation will enjoy long-term success. Porsche Consulting

Strate­gic change man­age­ment is the key term here. Not all of its under­ly­ing sci­en­tif­ic insights are brand new, but hard­ly any are broad­ly applied in prac­tice. Accord­ing to Freibich­ler, the main dif­fer­ence between strate­gic and tra­di­tion­al change man­age­ment is a mat­ter of “how peo­ple are made part of the change in these spe­cial sit­u­a­tions at work— and espe­cial­ly by whom.” His advice: “Get­ting peo­ple involved is a high-level task, and by that I mean a task for the top exec­u­tives.”

Instincts are highly relevant

Freibich­ler under­lines that in addi­tion to address­ing con­scious thought, lead­ers need to com­mu­ni­cate on sub­con­scious and instinc­tu­al lev­els. More­over, emo­tions should play an over­ar­ch­ing role. “The key is to appeal to peo­ple not only log­i­cal­ly, but psy­cho­log­i­cal­ly in many ways. In other words: peo­ple for­get facts, but they will always remem­ber how they felt in a par­tic­u­lar sit­u­a­tion.” Mod­ern lead­er­ship requires well-devel­oped inter­per­son­al skills—real empa­thy, applied to each and every indi­vid­ual.

Reason alone is not enough. What is the experiential side of a transformation like? Are people's feelings taken into account? Top managers lead the way in incorporating the emotional dimensions of thought and leadership. Ideally every board member should do this well.Porsche Consulting

Freibich­ler lists a num­ber of major com­pa­nies known for putting strate­gic change man­age­ment into prac­tice. Along with the insur­er Axa, phar­ma giant Novar­tis, and the Otto mail-order group, Spo­ti­fy and Tesla may serve as vivid exam­ples. Elon Musk, for instance, pin­points his vision­ary goal and offers an eas­i­ly under­stand­able mis­sion to both inter­nal and exter­nal tar­get groups. The same can be said of Ama­zon founder Jeff Bezos, whose clear and con­cise mes­sage is to “make cus­tomers’ lives eas­i­er.” For Freibich­ler, this is an exam­ple of the first of the five forces: “Every­one at a com­pa­ny needs a clear and pos­i­tive vision, and the eyes locked onto the com­mon goal. With this in mind, lead­ers should enthuse and encour­age their employ­ees to drive change with pas­sion.”

Com­mu­ni­ca­tion is the sec­ond force for suc­cess­ful change man­age­ment. “Here, too, it’s the top man­age­ment that needs to set the tone,” says Freibich­ler. “As role mod­els, top exec­u­tives should intro­duce change with authen­tic­i­ty, empa­thy, and the nec­es­sary author­i­ty. Not just once, but con­tin­u­ous­ly through­out the trans­for­ma­tion. The mes­sage needs to be emo­tion­al in nature and is to be com­mu­ni­cat­ed con­sis­tent­ly and across all chan­nels used by the tar­get group. And, if it is to be effec­tive in shap­ing the process of change, it can­not be repeat­ed often enough.”

Also, dia­logue needs to level through­out the entire work­force and across hier­ar­chies. Freibich­ler empha­sizes that both realms of the brain, name­ly rea­son and instinct, need to be addressed equal­ly. “Lead­ers need to lead the charge and start by speak­ing direct­ly with their employ­ees, at all hier­ar­chies. There­by irra­tional fears or reser­va­tions can be put to rest by indi­vid­ual dia­logue. As a result, anx­i­eties and con­cerns are dis­man­tled. At the same time, direct exchange allows for lead­ers’ enthu­si­asm to take root in their employ­ees on an emo­tion­al level.”

That being said, words have to be fol­lowed by deeds. In par­tic­u­lar, a company’s guid­ing prin­ci­ples and KPIs need to be adapt­ed — the third force of strate­gic change man­age­ment. They rep­re­sent the nec­es­sary orga­ni­za­tion­al frame­work that lays the ground­work for achiev­ing the transformation’s vision­ary goal. As Freibich­ler observes, “If the reg­u­la­to­ry con­text is not adapt­ed, pos­i­tive behav­ioral pat­terns are high­ly unlike­ly to take hold.”

Setting strong examples

The fourth force of change inter­prets work process­es in a more mod­ern way to reflect future real­i­ties. “Exist­ing types of col­lab­o­ra­tion should be fur­ther devel­oped into agile work modes that break up depart­ment lines. As a result, cre­ativ­i­ty and inno­va­tion poten­tial are unlocked, which oth­er­wise would have been left untapped in iso­lat­ing silo struc­tures,” says Freibich­ler. A key con­cept here is New Work. “Com­pa­nies are called upon to reshape their phys­i­cal and dig­i­tal work­spaces accord­ing­ly.”

Freibich­ler goes on to explain that lead­ers are to set exam­ples and to embrace their func­tion as role mod­els, prefer­ably through “observ­able behav­ior” that aban­dons tra­di­tion­al sta­tus insignias. Exclu­sive and exalt­ed exec­u­tive offices, still in use at many offices today, are “power sym­bols of the past.” As he empha­sizes, “Only when lead­ers dis­play sin­cer­i­ty, exert trans­paren­cy, and make them­selves acces­si­ble can the very impor­tant exchange of views and infor­ma­tion with every­one involved take place. Prac­ti­cal­ly, this can be achieved by estab­lish­ing open work­spaces that are home to all hier­ar­chies.”

The fifth force behind suc­cess­ful change con­sists of devel­op­ing new and future-ori­ent­ed skills. Accord­ing to a sur­vey of the largest 100 com­pa­nies in Ger­many, only about a quar­ter of all employ­ees today already pos­sess the skills their com­pa­nies will require in the future. “Sophis­ti­cat­ed meth­ods of improv­ing col­lab­o­ra­tion and work atmos­pheres are worth­less unless employ­ees know how to put the desired trans­for­ma­tion into prac­tice,” Freibich­ler con­cludes. Com­pa­nies there­fore need to offer attrac­tive train­ing oppor­tu­ni­ties that put all employ­ees in a posi­tion to “keep devel­op­ing in large­ly self-deter­mined and indi­vid­ual ways.” Stan­dard work­shops off the rack of a train­ing provider are by no means up for the task.

Porsche Consulting / Jörg Eberl
"People prefer to act out of conviction. Making collaborative efforts more transparent and offering high-quality further training opportunities help them identify with the company," says Dr. Wolfgang Freibichler. Porsche Consulting / Jörg Eberl

A more promis­ing approach than train­ing pro­grams from exter­nal providers is the estab­lish­ment or expan­sion of strong in-house acad­e­mies. “That type of for­ward-look­ing invest­ment always pays off, not only in eco­nom­ic terms but also with respect to a company’s image, iden­ti­ty, and attrac­tive rep­u­ta­tion as an inno­v­a­tive employ­er.” Freibich­ler also argues that train­ing pro­grams should be inte­grat­ed in everyone’s nor­mal work­days. “These pro­grams should not be viewed as alien, but instead become a nat­ur­al part of every­day work. That is in fact the best way to fos­ter cru­cial life­long learn­ing habits. When learn­ing is viewed pos­i­tive­ly as a per­son­al gain, effects are max­i­mized.”

The expert for trans­for­ma­tions speaks from expe­ri­ence when promis­ing his clients: “When com­pa­nies com­bine and orches­trate the five forces of change in an opti­mal way, they will har­mo­nize behav­iors and atti­tudes of their work­force with the trans­for­ma­tive goals of their busi­ness.”

InsightsStrategic Change Management

The five forces of change.

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